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Saturday, December 12, 2009

The politics and the economics are inextricably intertwined

Opposition criticisms of the Pre-Budget Report as "electioneering" are fatuous and naive. Government denials that it is such are evn more so. Here's today's Journal column.

Over the past couple of years, the Liberal Democrat Treasury spokesman Vince Cable has proved himself to be one of the most prescient, as well as one of the most popular politicians in the country.

It was he who first predicted the banking crisis, he who first advocated the nationalisation of Northern Rock – and he who told Gordon Brown he had gone “from Stalin to Mr Bean.”

Yet for all his undoubted expertise in economic matters, his criticisms of the pre-Budget Report unveiled by Chancellor Alistair Darling on Wednesday came over as rather naive and facile.

He charged Mr Darling with the grave offence of having unveiled “an election manifesto” rather than a national economic plan – scarcely surprising given that there is, er, an election happening in six months’ time.

Much of the debate over the PBR has thus far revolved around this point, with claims that Mr Brown overruled Treasury plans for faster action to reduce the country’s £178bn budget deficit.

The central accusation against the Prime Minister here is that he is allowing the politics of the situation to dictate the economics – and in so doing, putting the future economic health of the country at risk.

But although governments of both colour have certainly been guilty of that in relation to pre-election budgets in the past, I am not sure the two can so easily be disentangled in this instance.

To my mind, the differences between the parties are as much about the fact that Mr Brown has a genuinely different view from his opponents over how to tackle the recession, as they are about electoral politics.

For several months now, the main point at issue between the two main parties has been not whether spending cuts need to be made, but whether they should be made in 2010 or 2011.

In this sense, the PBR changed absolutely nothing. It merely made these already well-established dividing lines a little clearer.

Neither are those dividing lines in themselves anything new, being merely a modern-day re-run of the economic debates that have recurred since the original Great Depression of the 1930s.

There will always be those like Mr Brown who believe that increasing spending is the best way out of a recession, and those like Tory leader David Cameron who believe that simply makes a bad situation worse.

Hence, if the Prime Minister has his way, the cuts will come only once the economy has started growing again – as it is projected to do by 1.5pc next year and by 3.5pc in 2011.

As well as spending cuts, the fiscal tightening from 2011 onwards will also see a 1pc rise in National Insurance and a 1pc cap on public sector pay settlements.

This was reasonably smart politics by Mr Darling as it means an incoming Tory government is now committed either to carrying out a tax increase, or having to explain why they are making even deeper cuts.

He also scrapped his earlier proposal to increase inheritance tax thresholds, thereby challenging the Tories to axe their own controversial plan to raise it to £1m.

But if Mr Cable’s accusation of electioneering against the Chancellor was somewhat fatuous, Mr Darling’s denial of the charge was possibly even more so.

Indeed, it was about as disingenuous as Mr Brown’s claim to have cancelled the autumn 2007 election in order to “set out his vision” rather than because of a couple of adverse opinion polls.

The truth is, this PBR was designed to convey a very blunt message to the voters: “Things are bad, but they would be a damned sight worse with the other lot in charge.”

It may not be the most inspiring of election pitches, but as Labour discovered to its cost in 1992, it’s one that has often proved successful.

"Opposition criticisms of the Pre-Budget Report as "electioneering" are fatuous and naive."

You then went on to quote remarks by the Sage of Twickenham. Since when were the LibDems HM's Official Opposition?

That apart, are you really surprised that the Conservatives (as well as other parties) made a point of saying this was a PBR aimed at giving Labour some of those famous "dividing lines" that he needs to retain his core vote? Aren't you being a bit naive too? The "opposition" need dividing lines too.

This Government looks like running the story of all its Labour predecessors in reverse. The others started with some kind of socialist aspiration, ran into difficulty and saw their Chancellors end up adopting right-wing economic orthodoxy (Healey and Snowden definitely did, Cripps and Jenkins arguably to a lesser extent).This lot have run a right-wing economic policy, created the deepest recession in our history, and only belatedly are discovering the virtues of trying to deliver stimulus and social justice

Fact is labour are in power, and people are suffering and struggling. most people could not even tell you what the hell a PBR was. All they know is the money in their pockets is not going so far. MP's look to be stuffing the old pockets. 88 are now going to a tribunal and may be a court to not repay the large expenses.

It's all falling on labour, I see petrol price war has broken out in my area not going down but up wards.

We are going into a cold snap and my wife is wearing extra jumpers and blankets, so we keep our heating turned off. in Labours new world.

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"He saw politics very much like Trollope, as the interplay of personalities seeking preferment, rather than, like me, as a conflict of principles and programmes about social and economic change."

Denis Healey, writing about Roy Jenkins in "The Time of My Life."

"I'll tell you what happens with impossible promises. You start with a series of far-fetched resolutions, and these are then pickled into a rigid dogma, a code. And you go through the years sticking to that, outdated, misplaced, irrelevant to the real needs, and you end in the grotesque chaos of a Labour council, a Labour council, hiring taxis to scuttle round the city handing out redundancy notices to its own workers. I'll tell you - and you'll listen - you can't play politics with people's jobs and with people's homes and with people's services."

Neil Kinnock, Bournemouth 1985

"But the most eloquent message concerns the Blair government. It must be right at all times. Above all, the integrity of the leader can never be challenged. He never did hype up intelligence. He didn't take Britain to war on any other than the stated terms. Any suggestion of half-truth, or disguised intention, or concealed Bushite promises is the most disgraceful imaginable charge that deserves a state response that knows no limit.

"That's how a sideshow came to take over national life. Now it seems to have taken a wretched, guiltless man's life with it. Such is the dynamic that can be unleashed by a leader who believes his own reputation to be the core value his country must defend."

Hugo Young, on the death of Dr David Kelly, 2003

"The socialism I believe in is everyone working for each other, everyone having a share of the rewards. It's the way I see football, the way I see life."